AFTA: Turning the ASEAN
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AFTA: Turning the ASEAN Dream Into Reality. AFTA 2002 Symposium Jakarta, Indonesia January 31, 2002 John Parker President, ASEAN Operations Ford Motor Company. Sustained Investment Growth High Value-added Jobs and Strong Export Growth. ASEAN under AFTA. AFTA.

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AFTA: Turning the ASEAN Dream Into Reality

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Afta turning the asean dream into reality

AFTA: Turning the ASEANDream Into Reality

AFTA 2002 Symposium

Jakarta, Indonesia

January 31, 2002

John Parker

President, ASEAN Operations

Ford Motor Company


The automotive industry imperative

Sustained Investment Growth

High Value-added Jobs and Strong Export Growth

ASEANunder AFTA

AFTA

The Automotive Industry Imperative

The foundation of sustainability in the auto industryis global competitiveness, which is a functionof continued liberalization

Product DesignAnd Development

IntegratedManufacturing

ASEANToday

Low Value-added

Limited Exports

Low Technology

CKD

National

Regional

Global

Stages of Liberalization


Afta turning the asean dream into reality

ASEAN Auto Growth… A Strong Recovery

  • Strong Recovery after Crisis, but lags China in overall size.

  • ASEAN Industry Size Only Competitive if Viewed as One Region


Auto manufacturers have invested heavily in asean since 1995

COUNTRY

2001

2002

2003

2004

2005

2006

2007

2008

Thailand

20

15

5

Philippines

20

20

5

Indonesia

15

5

Malaysia

N/A

N/A

N/A

N/A

20

15

10

5

Vietnam

N/A

N/A

20

15

10

5

Auto Manufacturers Have Invested Heavily in ASEAN since 1995…

Millions US ($)

BUT…


Manufacturing rationalization starts in 2003 is it afta or the thai phil indo fta

THAILAND

Ford Ranger

Mazda Fighter

Chevrolet Zafira

Toyota Altis

Honda Fit

Ford Ranger

Mazda Fighter

Volvo S80

Chevrolet Zafira

Honda Accord

Nissan Sunny

Toyota Altis

Ford Laser

Ford Escape

Mazda Protégé

Mazda Tribute

Ford Laser

Ford Escape

Mazda Protégé

Mazda Tribute

Honda Stream

Honda CR-V

Nissan X-Trail

Toyota Vitz

Honda Stream

Honda CR-V

Toyota Vitz

PHILIPPINES

INDONESIA

MALAYSIA ?

Manufacturing Rationalization starts in 2003:Is it “AFTA” or the “Thai-Phil-Indo FTA?”

VIETNAM ?

Source: Press Reports


When will malaysia join afta uncertainty jeopardizes regional integration

When Will Malaysia Join AFTA? Uncertainty Jeopardizes Regional Integration

  • Largest Mid-size Car Market in ASEAN (Represents 35% of ASEAN Vehicle Market).

  • 5% AFTA Duty for CBU Deferred Until 2008 (5 years later than Thailand and Philippines and 6 years later than Indonesia).

  • Malaysia Could Be Integral Part of Regional Production

    • But investment decisions for 2005 are being made today.

  • Damages Investor Confidence in All of ASEAN

  • Gives Economies of Scale Leadership to China


Cbu aico a great example of forward thinking delivering investment into asean

CBU AICO: A Great Example of Forward Thinking Delivering Investment into ASEAN

Ford Thailand

Ford Philippines

PARTS

BENEFITS

  • Eliminates Duplicative Vehicle Assembly and Supply Bases.

  • Major (Multimillion Dollar) Investment in Both Countries for New Products, possible because of Greater Economies of Scale.

  • “Sneak Preview” into AFTA – product complementation, plant rationalization, economies of scale.


Afta turning the asean dream into reality

Reality: China’s Diverting Investment Dollars From ASEAN

38% ofAsia FDI

61% ofAsia FDI

Source: United Nations(Jan. 2002)

18% ofAsia FDI

9% ofAsia FDI

  • Consider:

  • China took 15% of Automotive FDI in 1990 but that number increased to 64% in 2000.

  • Globally, FDI dropped almost 50% in 2001.

  • According to JETRO, 8% of Japanese MNCs will relocate from ASEAN to China in 2002 because of WTO accession.


With wto accession china will increase exports to member countries

With WTO Accession, China Will Increase Exportsto Member Countries

Source:UBS Warburg

Unless AFTA is implemented for the auto industry on time in all countries, China will continue to attract more automotive FDI and will soon start to EXPORT.


What asean should do to position for future growth

What ASEAN Should do to Position for Future Growth

  • AFTA is key – Regional Tariffs Must Come Down

    • Most Critical Aspect of Growing Volume.

    • Malaysia’s Delay Closes the Largest Passenger Car Market in ASEAN to Regional Integration Until 2008.

  • Meet WTO TRIMs Obligations Now

    • Continuing TRIMs in Malaysia and Philippines Slows Down Global Competitiveness in Component Manufacturers and Prevents Regional Sourcing Integration for Components and Parts.

  • Harmonize Vehicle Emissions/Safety Standards

  • Harmonize “External” MFN Tariffs

    • Will Result in Lower Cost CKD Imports – China Drops to 10% in 2006!

  • Modernize Vehicle Tax Policies

    • Current Structures Actively Suppress and Distort What Consumers Want.


Afta turning the asean dream into reality

AFTA: Turning the ASEAN DreamInto Reality

Thank You


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